The regulator that has the authority of overseeing laws for cryptocurrencies in Dubai is named the Virtual Asset Regulatory Authority (VARA).
The authority recently issued new guidelines that would apply to all virtual asset service providers (VASPs) who are running their operations in the emirate.
A blockchain and crypto attorney based in the United Arab Emirates, Irina Heaver said that ‘Full Market Product Regulations’ had been issued by VARA recently.
The lawyer said that these comprise four rulebooks that are mandatory and the rulebooks are also activity-specific, which outline the rules that all operating VASPs have to comply with.
It should be noted that the rules are only applicable to those participating in the market within Dubai and will not apply to those that are operating under the DIFC.
This is due to the fact that the Dubai International Finance Center is actually a free zone that has its own regulatory body.
It was also highlighted by the Dubai regulator that all participants in the market, regardless of whether they have obtained a license from VARA or not, would have to comply with regulations related to advertising, marketing, and promotion.
Anyone who violates the outlined regulations would be fined between 20,000 dirhams and 200,000 dirhams, which are $5,500 and $55,000, respectively.
As far as repeat offenders are concerned, they could be fined as much as 500,000 dirhams, which would be around $135,000.
The new regulations that have been issued by VARA are also aimed at offering guidance related to other matters, including the issuance of digital assets.
Heaver said that the new update from VARA has a number of takeaways for participants in the crypto sector in Dubai.
These include the fact that privacy coins cannot be issued and registration with VARA is mandatory for traders who have a trading capital of more than $250 million.
The new VARA regulations have also outlined the fees that would be charged for broker-dealers, annual supervision for custody, lending services, licenses, exchanges, and advisory services.
Depending on the services, the fees are anywhere between 40,000 dirhams and 200,000 dirhams, which are around $11,000 and $55,000.
Heaver asserted that it was a positive sign that VARA had introduced the new regulations because they would provide the crypto space with some much-needed clarity.
She said that regulatory clarity is always an advantage, not just for businesses, but also for investors, consumers as well as the Emirate of Dubai.
She went on to say that they had been waiting for the regulations and they were a positive development for Dubai’s crypto market.
But, she also said that the regulator undoubtedly has the broad authority of interpreting the new regulations and applying them in whatever way it deems suitable.
Nonetheless, she said that market participants were hopeful that VARA would do the application and interpretation in a manner that is in accordance with the spirit of the leadership in Dubai.
This means that they hope it would promote entrepreneurship and business acumen.